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Should your loyalty program go digital?

Programs that reward a restaurant’s loyal customers have proven effective because they make those customers feel special and increase the likelihood they will share their positive experience with friends.  To date, they have typically relied on punch cards to keep track of customers’ progress toward collecting a program’s reward. But now loyalty reward apps can give restaurant operators a new tool to manage these programs in the smartphone era.

Below are the seven key features of a successful digital loyalty program that will help attract new customers to your restaurant and keep current customers coming back for more.

1. Rewards

First, your rewards card app must offer true value to your patrons. Customers are sensitive to the notion of a “gimmick” and prefer rewards that they consider a real value. A great way to better your relationship with your customers is to offer them a valuable reward that provides a sense of exclusivity. Maintaining what feels like a personal relationship with your customers is essential to keeping them loyal.

2. Reinforce loyalty

Reinforce loyalty to your brand by offering customers incentives for choosing it over competitors. If a competitor offers a loyalty rewards program and you don’t, then you’re providing a less-compelling reason for a potential customer to patronize your restaurant.

It’s important to keep tabs on your customers’ visit history, especially when a competitor opens nearby. By examining trends in your customers’ visit history, you’ll be able to pinpoint potential downfalls in your sales numbers and proactively increase them by enticing your customers back to your restaurant with certain incentives.

3. Utilize data

Customer reward apps can provide your business with a wealth of useful data and metrics. By paying attention to this data and aligning your rewards program with information on customer preferences, you’ll increase the effectiveness of your rewards program. As you fine-tune your rewards program, the quality of customer data improves as the program becomes more effective. Translation: happier customers equal more profit.

Roughly 80 percent of your profits come from only 20 percent of your customers. Thus it’s less expensive to retain current customers than to find new ones. By identifying and paying close attention to that 20 percent, you can ensure that those customers are always happy. Offering additional perks, including discounts and rewards, to this group is great way to show that you appreciate them and ensure repeat business.

4. Relationships

All businesses, especially restaurants, need to be focused on creating and maintaining solid relationships with their customers. Digital loyalty programs are a great way to better the communication and thus the relationship between your restaurant and customers. Successful loyalty reward apps will make customers feel special and appreciated. Ultimately, an effective reward app will also incentivize your customers to not only return more frequently, but during specific times.

One useful tactic is to send customers private, VIP deals on their mobile phone shortly after they’ve visited your restaurant to entice them to return to your business at specific days and/or hours of the day. These VIP deals make customers feel special while also getting them to return during potentially off-peak hours.

5. Create brand ambassadors

Great relationships with your guests translate into brand advocacy. If your customers become ambassadors of your brand, they become a marketing tool with an authenticity that traditional marketing simply can’t replicate. Brand advocacy should be the goal of your relationships, as they are incredibly profitable.

“When properly motivated and encouraged, brands’ most loyal customers can become their most active advocates,” says Dave Hanley, co-founder at Banyan Branch, a popular social media marketing firm. “This path of integrating social media with loyalty programs and rewards will ultimately allow brands to grow their online conversation and provide deep and interesting content created by those who know them best.”

6. Target your deals

Targeted deals and rewards provide your customers with an incentive that appeals to them individually while also helping your business grow and meet specific goals. Analyzing your sales numbers and customer behavior to determine what your true off-peak times are is a great way to start. You can then target specific deals and rewards around your off-peak hours to increase sales during those times and maximize your resources.

You can also target your rewards program around menu categories you’d like to promote, such as desserts, cocktails or even limited-time offers. A good digital loyalty program can be easily adapted and customized to accommodate different seasonal trends or sales goals.

7. Modernize

A main advantage digital reward cards have over punch card-based systems is that they’re adjustable. While traditional punch cards are static, reward card apps provide customer data that allows you to tailor your offers and see what works and what doesn’t. The result is a cycle of better customer rewards that will increase visits of both new and current customers, which in turn, provides more customer data, and so on.

Attracting new customers and retaining current customers is essential to the survival and success of your restaurant. Creating relationships with your customers keeps them loyal to your brand and can make them advocates for your business. Reward card apps are a great way to get the ball rolling on a modern rewards program that attracts customers, keeps customers and converts them into advocates for your business.

James Sun is the c.e.o. of digital loyalty platform company Pirq. He is also a TV host—BBC’s “Sun Tzu’s War on Business”—and was a finalist on Donald Trump’s reality show “The Apprentice.”